"We believe that the combined business will be able to expand more quickly and will become the UK's dominant lifestyle hotel group," says Richard Balfour-Lynn, chief executive of MWB. "However, we do recognize the importance of maintaining both HDV and Malmaison as two distinct and separate brands although there is tremendous scope for cross fertilization of business between them."

Following the acquisition, it is intended that HDV will continue to focus on expanding into cathedral and university towns while Malmaison will concentrate on the larger cities. In December 2004, Malmaison will open a 64-bed Belfast property, and in late Autumn 2005 will open the 95-bed Malmaison in Oxford. While Hotel du Vin opens its 42-bed hotel in Henley-on-Thames in March 2005.

HDV will be managed by the current Malmaison team, led by chief executive Robert B. Cook, who rejoined the Malmaison business earlier this year. HDV's team, including founders Robin Hutson and Gerard Basset, as well as Peter Chittick, will not remain post-acquisition. Each has signed non-compete agreements. Charles Morgan remains operations director for HDV.

The purchase price represents the net asset value of HDV based on its accounts for the nine months ended June 30, inclusive of part of the development costs at Henley-on-Thames and based on an independent valuation of its properties at the date of acquisition.